Dell, Cisco Pummel Competition In 1Q Server Market: Gartner

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Meanwhile, the market for RISC and Itanium-based servers continues to plummet.

Gartner estimated RISC/Itanium server shipments for the first quarter of 27,973 units, down 38.8 percent over last year. Revenue for those servers fell 35.8 percent to $1.4 billion.

IBM is still the leader in this part of the market despite an 18.9 percent drop in shipments and a 32.3-percent drop in revenue. Oracle saw its shipments dive by 60.4 percent to 7,459 units, with revenue falling 38.3 percent. HP's shipments fell 39.0 percent, with revenue falling 39.6 percent.

Rich Baldwin, CIO and chief strategy officer at Nth Generation Computing, a San Diego-based solution provider and HP partner, said the drop in HP server sales is really just a blip on the radar, and that HP is in position to strengthen its server business.

"It's true the industry is changing," Baldwin said. "I see the cloud taking share. But I also see Meg [Whitman, HP's CEO,] making the right changes and empowering her people. Moral at HP is high."

"HP is telling us, 'We're not going to lose on price,'" he said. "Some people are going to buy on price today, but HP is doing what it takes to respond."

While Dell's server sales are up, Dell's profits continue to bleed, Baldwin said. "Sure, you can grab share with lower profits, but that's not a sustainable business model," he said.

Gartner's Hewitt is not convinced that Dell is getting market share just by ignoring profits. "I see Dell's ASPs [average selling prices] growing. They're selling a viable server for virtualization. And they're selling in new geographies."

"We are seeing big customers who buy Superdome servers placing fewer orders," Baldwin said. "And those servers are priced at around a million dollars. However, things are moving to industry-standard servers. HP's HP's Gen8 servers are doing well. In fact, they're doing so well that people don't need to buy as many. So the people who were buying Superdomes and now switching to ProLiant DL980s. Price for the DL980s are a magnitude of order less than Superdomes, but people buy multiple DL980s."

HP declined to discuss its falling server shipments and sales.

However, HP responded to CRN requests for more information with an email which read, "HP continues to be the No. 1 worldwide server leader for 17 years and now 68 quarters. As a leader in defining next-generation computing platforms for decades. HP recently unveiled the world’s first commercially available HP Moonshot system, delivering compelling new infrastructure economics by using up to 89 percent less energy, 80 percent less space and costing less than 77 percent compared to traditional servers."

Doron Kempel says selling hyper-convergence can be challenging for solution providers, but success will come from taking business from competitors that are unprepared or hesitant to embrace the technology.